SACRAMENTO--United States Attorney McGregor W. Scott and FBI Special
Agent in Charge Michael Mason announced today that Alyn Richard Waage,
56, of Canada, pled guilty to charges relating to the Tri-West Investment
Club, an Internet-based investment fraud scheme that netted nearly $60
million. The Tri-West case is one of the largest Internet investment fraud
cases in the country.

According to Assistant U.S. Attorneys John K. Vincent and Robin Taylor,
who are prosecuting the case, Alyn Waage pled guilty on May 5, 2003, to
one count of mail fraud, one count of wire fraud, and one count of conspiracy
to commit money laundering. Alyn Waage faces a maximum of 5 years in prison
on each of the mail fraud and wire fraud charges and 20 years in prison
on the money laundering charge, and faces fines of up to twice the value
of the investors’ losses. Sentencing is currently set for July 14, 2003,
before United States District Judge Edward J. Garcia.

As part of a plea agreement with the United States, Alyn Waage has agreed
to cooperate with authorities and to forfeit his interest in millions
of dollars of properties connected to the scheme, including real property
in Mexico and Costa Rica, a yacht, a helicopter, numerous late-model cars,
and bank accounts.

Co-defendant Michael Webb, who was arrested with Alyn Waage in September
2001, is charged with being the designer of the scam’s allegedly fraudulent
Web site. Webb remains in custody, and his trial is scheduled to begin
in Sacramento on July 28, 2003.

Vast “Ponzi” Scheme

Alyn Waage’s guilty plea results from an international effort by the
United States, Costa Rica and Canada to investigate the activities of
the Tri-West Investment Club, which solicited investments in a “Bank
Debenture Trading Program” on the Internet using the Web site www.triwestinvest.com.
The Web site claimed that this program, formerly available only to the
“very wealthy,” offered investors a “guaranteed high return”
with “no risk” of loss. Tri-West claimed it earned these returns
by purchasing “Promissory Bank Notes” issued by key “Prime
Banks.” Visitors to the Web site were invited to join by investing
in $1,000 increments, and were promised 120 percent annualized return.
Alyn Waage admitted that based on these false promises, Tri-West duped
approximately 15,000 investors to invest approximately $60 million from
1999 to September 2001.

In entering his guilty plea, Alyn Waage admitted that there never was
any “Bank Debenture Trading Program.” Instead, according to
Alyn Waage, he and others ran Tri-West as a vast “Ponzi” scheme
that used more recent investor funds to make “dividend” payments
to earlier investors to give the false impression of a successful investment
program. None of the investors’ money was invested as promised on the
Web site, but instead was used to purchase millions of dollars worth of
real property in Mexico and Costa Rica, as well as high-priced items such
as a yacht, helicopter and numerous late-model cars. Alyn Waage also admitted
that millions of dollars were funneled to numerous bogus “shell”
corporations that were created in Costa Rica for the purpose of concealing
the ill-gotten gains. (A more detailed description of these activities
is contained in this Office’s press release dated September 6, 2001, which
is available at www.usdoj.gov/usao/cae/home/.)

Seizures and Arrests in Costa Rica, Latvia, and Mexico

In September 2001, Costa Rican authorities, in cooperation with the FBI
and the U.S. Attorney’s Office, seized and froze numerous assets connected
to the fraudulent scheme, including approximately $6 million dollars in
Costa Rican banks, and real property, cash, jewelry, a yacht, helicopter,
and cars worth millions more. At the same time, Alyn Waage and Michael
Webb were arrested. Alyn Waage and Webb were extradited to the United
States in December 2002. Requests for international assistance have also
resulted in the freezing of millions of dollars in bank accounts and the
seizure of real properties in Latvia and Mexico.

Cases Against Other Defendants
Cary Waage, Alyn Waage’s son, pled guilty to one count of mail fraud
and one count of conspiracy to commit money laundering on April 29, 2002.
Criminal complaints have also been filed against Lynn Waage Johnston,
Alyn Waage’s sister and Tri-West’s alleged bookkeeper; Michelle Higgins,
Alyn Waage’s wife; and Evan Theodore Smith Pryor, an alleged Tri-West
operative in Costa Rica. Each of these three individuals is currently
a fugitive.

The Complaints against all remaining defendants contain only allegations,
and those defendants who have not pled are presumed innocent until proven
guilty at trial.

Civil Actions
The United States Attorney’s Office has also instituted three civil actions
relating to Tri-West that seek the forfeiture of the millions of dollars
of assets in Costa Rica and Latvia which are allegedly connected to the
scheme. Assistant U.S. Attorney Courtney Linn is handling the civil cases.
In January 2003, Judge Edward J. Garcia entered final judgments of forfeiture
in two of the three forfeiture actions. The third action remains pending.

On December 19, 2002, the SEC also obtained a permanent injunction against
Alyn Waage, based on multiple securities violations. In connection with
that proceeding, Alyn Waage was ordered to disgorge $58 million and pay
a civil penalty. In addition, more than 10 states have already filed cease
and desist orders against Tri-West for alleged violations of the securities
laws. The North American Association of Securities Administrators has
actively investigated this case for the past year. The national Internet
Fraud Complaint Center, a joint organization of the FBI and National White
Collar Crime Center, which is located in West Virginia, has also been
coordinating complaints regarding Tri-West.

This case has been investigated with the assistance of the Federal Bureau
of Investigation, Internal Revenue Service - Criminal Investigation, and
the U.S. Securities & Exchange Commission. The U.S. Marshals Service
assisted with the extradition of the defendants from Costa Rica to the
United States and with helping to secure assets in Costa Rica.